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State Name: New Jersey
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State Abbreviation: NJ
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If you've been following the MBS Commentary, you know what a big deal this afternoon could be. Markets have been preparing for it for weeks and MBS Live members have been on top of those movements every step of the way.

This afternoon, when markets are convulsing mere milliseconds after the Fed Announcement, MBS Live members will know what's going on before anyone else. The accuracy and speed of our real-time price stream and alerts is unmatched.

Bond markets, including MBS are generally weaker today vs yesterday but MBS and Treasuries have both seen decent supportive bounces at technical levels. For MBS, the odds-on favorite for an intermediate-term pivot point is 103-10. Prices briefly hit that level in the wake of this morning's scheduled Fed "Twist" buying. 10yr yields continue to find support in the mid 2.01's, which is a noticeable pivot point stretching back to April 9th. Volume and volatility are fairly light in the big picture, those prices have fluctuated fairly rapidly between highs and lows today. The range in MBS has been exceedingly narrow at 103-16 to 103-10, the latter consequently suggests itself as a good indication of growing reprice risk with "early lenders" considering it on the approach and "the rest" if we break lower.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Both MBS and Treasuries opened in slightly weaker territory this morning after the European session offered a generally more positive tone. The sense of "risk on" vs yesterday's "risk off" was readily apparent in the tight connection between stocks and bonds overnight. In conjunction with improving German investor sentiment, Spanish debt auctions were strong enough to undo some of yesterday's flight-to-safety.

Weaker-than-expected Housing starts helped bond markets slightly after 8:30am, but as we noted in the "Day Ahead" (linked below, markets remain more interested in the broader tonal shifts in RISK, led primarily by developments in Europe. To that end, the IMF was out at 9am with upward revisions to growth forecasts and more importantly German FinMin Schaeuble followed shortly saying Spain wasn't a candidate for a bailout and that the fundamental Spanish picture wasn't comparable to other countries receiving aid.

Until then, 10yr yields had been honing in on 2% and moved just over 2.01% after the news. At 9:15am, weaker-than-expected Industrial Production data at home helped yields get back to the low 2's, but no discernible break lower yet.

The saving graces are twofold. First, there's a nice little 2 week pivot point just over 2.01 in 10yr yields, we may be seeing some measure of technical support there. Secondly, MBS are outpeforming and down only 1 tick now at 103-15 in Fannie 3.5's. 10yr yields are heavily considering breaking below 2% again, currently up only 2 bps on the day at 2.0016.

No more scheduled data, and ever-waning Euro-drama into this time of day.

Industrial production was unchanged in March for a second month but rose at an annual rate of 5.4 percent in the first quarter of 2012. Manufacturing output declined 0.2 percent in March but jumped 10.4 percent at an annual rate in the first quarter.

The gain in manufacturing output in the first quarter was broadly based: Even excluding motor vehicles and parts, which jumped at an annual rate of nearly 40 percent, manufacturing output moved up at an annual rate of 8.3 percent and output for all but a few major industries increased 5 percent or more. In March, production at mines rose 0.2 percent and the output of utilities gained 1.5 percent. For the quarter, however, the output of utilities dropped at an annual rate of 13.8 percent, largely as a result of unseasonably warm temperatures over the past several months, while the output of mining fell 5.4 percent. At 96.6 percent of its 2007 average, total industrial production for March was 3.8 percent above its year-earlier level.

The rate of capacity utilization for total industry edged down to 78.6 percent, a rate 2.1 percentage points above its level from a year earlier but 1.7 percentage points below its long-run (1972--2011) average.

BUILDING PERMITS
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 747,000. This is
4.5 percent (±1.1%) above the revised February rate of 715,000 and is 30.1 percent (±1.6%) above the March 2011 estimate of
574,000.
Single-family authorizations in March were at a rate of 462,000; this is 3.5 percent (±1.1%) below the revised February figure of
479,000. Authorizations of units in buildings with five units or more were at a rate of 262,000 in March.

HOUSING STARTS
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000. This is 5.8 percent (±15.6%)* below the
revised February estimate of 694,000, but is 10.3 percent (±14.6%)* above the March 2011 rate of 593,000.
Single-family housing starts in March were at a rate of 462,000; this is 0.2 percent (±12.6%)* below the revised February figure of
463,000. The March rate for units in buildings with five units or more was 178,000.

HOUSING COMPLETIONS
Privately-owned housing completions in March were at a seasonally adjusted annual rate of 600,000. This is 4.2 percent (±13.5%)*
above the revised February estimate of 576,000 and is 0.5 percent (±15.3%)* above the March 2011 rate of 597,000.
Single-family housing completions in March were at a rate of 440,000; this is 1.4 percent (±12.5%)* above the revised February rate of
434,000. The March rate for units in buildings with five units or more was 146,000.

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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